A money-laundering butterfly flaps its wings in China... and the US housing market crashes?
Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble. And of course similar things could be said about most of the rest of the planet as well. And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.
The continuity bias is astounding as many with assets address this as an “extra rough patch” to get through rather than the clear paradigm shift it has been telegraphed to be.
This week was interesting to say the least and it is ending with a bang. We are covering a number of brief subjects this week. I hope you enjoy them.
Having explained how well the economy is going - best in the world, apparently - President Obama is moving on to the immigration scandal. In an unexpected address from his fund-raising trip to Texas (Dallas actually - 100s of miles from the border), and on the heels of his 'executive action' demands on immigration reform, Obama will explain how it's none of his fault and unless 'the other side' give him carte blanche, it's a humanitarian crisis... think of the children (and the taxpayer funding)...
The Fed and its policies have warped the culture of capitalism to the point that we now exist in a Centrally-Planned nightmare in which a handful of academics influence the economy and world reserve currency with every speech and verbal statement.
The record bank lending binge “not evidence of an economic recovery.” Instead, they’re fretting about the greatest credit bubble in history.
"People who take short cuts, are political, prioritize themselves above others, take excessive risks for personal gain, don’t value capital, or are unethical are outright cancers. These types of people will not only flourish in the next crisis, but most probably they will cause it."
As is now well-known, following the news broken first by Zero Hedge in May, Belgium, or rather "Belgium" (because clearly someone is using Belgian-based Euroclear as a front to cover their insatiable appetite for US paper) has emerged as the biggest buyer of US Treasurys in 2014, close to surpassing even the Federal Reserve as the biggest monetizer of the US deficit. But what about other countries in the world, such as for example France: a country whose economy virtually everyone admits is in shambles and yet whose bond yields have followed the rest of the world to slide to near record lows of 1.70% most recently. Here is the answer.
Now that even that bedrock of the Keynesian voodoo religion, the Gross Domestic Product calculation, has become a ridiculous farce, with everyone in Europe suddenly adding the uncalculable "contribution" from drug dealers and hookers all in a mad dash to make debt/GDP ratios appear better than they are, it is truly time to unleash the clowns as none other than the country which has taken fabricating economic data to an artform, no not the US for those confused but China, is preparing to change the way its calculates its GDP, with the biggest contribution coming from, hold on to your hats, R&D. One wonders if "reverse engineering" of pirated products and services is covered in this "non-GAAP GDP" category. The end result? GDP for the country which cumulatively will be several percentage points higher once the entire fudging/recasting exercise is completed. Here are the details.
It appears that having pushed France forcefully into the Russia-China Eurasian, and anti-US camp, the US will now do the same with Germany. Because by infuriating the German population with first refusing to return their gold contained (the legend goes) at the New York Fed, and then with scandal after spying scandal, now the time has come to "punish" Germany's largest banks for the same kind of money laundering that BNP was engaged in. As the NYT and Reuters report, the time has come to shift away from the BNP scandal and focus on what will soon be the Commerzbank and Deutsche Bank fallout. According to the NYT, the money laundering crackdown is "bound for another European financial center: Germany. As NYT adds, correctly, "The Commerzbank investigation features an added twist: The bank is 17 percent owned by the German government. It is unclear whether — as in the BNP case, which led French authorities to intervene on the bank’s behalf — the settlement talks could inflame diplomatic tensions between Washington and Berlin."
While Spain may have been scrambling for the past several years to figure out how to spin its economy, boasting one of the highest unemployment rates in the Eurozone, as recovering, coming up with numerous changes to what it believes should constitute GDP, most recently including an estimate of the contribution hookers and blow add to the economy, a surprising place which has emerged as a potential source of huge economic upside for Spain's economy is none other than the recently established Islamic State created by the ISIS al-Qaeda spin off. Because, stunningly, in a story right out of a history book covering the Islamic Conquest and subsequent Reconquista (however not in the middle ages but in the 21st century), the hardest-core Islamists around, those which even al-Qaeda deemed too "extremist", appears to have sworn to invade Spain next!
"I will not be purchasing any further GM vehicles since GM does not stand behind vehicles when a serious malfunction occurs... My children and I could have been fatally injured due to the disintegration of the brake line."
The man who assisted and "consulted" Gordon Brown (a man so clueless about finance he didn't and still doesn't have any idea what a carry trade is, let alone one in gold) the man who was Chief Manager of the Bank of England's reserves (all reserves) when Britain commenced its gold dumping campaign intended to, as usual, bail the big banks whose gold shorting trades had gone horribly wrong, the man - John Nugee - is the same man tasked with making the London gold fix fair, efficient, transparent and unrigged. One can't make this up.
Even as the western media finally remembered over the weekend there was a Ukraine civil war going on following an advance by the Kiev army to retake some rebel strongholds in the Donbas region, with some curious what if anything Putin would do in retaliation, what Putin, or rather his envoy Sergei Lavrov were actually doing, was completely ignoring the Ukraine situation (where the West has long since conceded the loss of Crimea to the Kremlin) and instead focusing on securing the successful launch of the South Stream (remember: the second South Stream goes online, Ukraine becomes irrelevant). And since Russia already signed another historic agreement with Austria in June, which positioned the AAA-country (with some surprising emerging bank troubles subsequently) squarely against its fellow European peers, it was the turn of the other South Stream countries, namely Bulgaria.